The Effect of Responsive and Proactive Market Orientation on Product Innovation and Company Performance: A Case Study on MSMEs in the Culinary Field in D.I. Yogyakarta

Siti Nursyamsiah,A’bdul Fatach Ichwan

doi:10.33019/ijbe.v3i1.117

Abstract

This study aims to determine the effect of Responsive and Proactive Market Orientation on Product Innovation and Company Performance. The population in this study is the Micro, Small, and Medium Enterprise (MSME) in the Culinary Division at D.I. Yogyakarta and use 200 respondents as a sample. By using convenience sampling technique, the researchers have the freedom to choose any culinary MSME found around D.I. Yogyakarta to be the respondent. Hypothesis testing using Structural Equation Model (SEM) analysis. The findings show that there is a positive influence of responsive market orientation on product innovation performance, proactive market orientation on product innovation performance, product innovation performance on the company's market performance, and the company's market performance on the company's financial performance. The findings of this study contribute to MSMEs that information about market orientation adopted by business actors or companies can affect the performance of new product innovations in the market to improve the company's market performance which then affects the company's financial performance.

Highlights

In Indonesian business sector, the type of business conducted most by people is Micro, Small, and Medium Enterprise (MSMEs)
It takes consistency to adopt one of the market orientations since both of them influence innovation performance in producing new products to succeed in markets
The hypotheses testing the influences of responsive market orientation and proactive market orientation to market performance are not proven

Summary

Introduction

In Indonesian business sector, the type of business conducted most by people is Micro, Small, and Medium Enterprise (MSMEs). MSMEs play an essential role in the Indonesian economy as it managed to prove its existence in it. MSMEs has stabilized economy by opening employment opportunities and distributing income. Its low productivity rate has lowered its value added for economic activities. MSMEs low productivity and add value are affected by market growth volatility in its respective fields. It occurs due to low market understandings and information. Market globalization marked with the increase of interdependence nature and integration of global economy (Hill, 2010) has encouraged the development of marketing science in determining corporate strategies to transform from product-oriented or customer-oriented to market-oriented (Day, 1999)

Objectives

Methods

Results

Conclusion